Fannie Mae, Freddie Mac to hike mortgage guarantee fees

WASHINGTON (Reuters) - Fannie Mae and Freddie Mac will raise certain fees they charge mortgage lenders, their regulator said on Monday, a step designed to encourage private firms to wade back into the housing finance market.

The so-called guarantee fees that the two taxpayer-owned companies charge lenders to guarantee new loans will increase by an average of 10 basis points, the Federal Housing Finance Agency said in a statement.

Increasing the guarantee fee will ultimately make it more expensive for lenders to use the government-controlled companies to back their loans and give them an incentive to use the financial market instead.

Edward DeMarco, acting director of the Federal Housing Finance Agency, said the fee increases are needed to shrink the footprint of the two companies in the mortgage market.

"The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating. These changes should encourage further return of private capital to the mortgage market," DeMarco said.

Fannie Mae and Freddie Mac charge the fees to investors for guaranteeing principal and interest.

In addition to a yearly 10-basis point increase, the FHFA said Fannie and Freddie will alter the pricing frameworks used to assess credit risk characteristics of borrowers. The agency also eliminated most across-the-board adverse market fees.

FHFA said it anticipates that this adverse market fee will be re-evaluated on an annual basis.